SCG Legal Newsletter (February 2017)
Legal Departments Increasingly Moving More Work In-House, Report Says
Reacting to increased pressure to improve efficiency, legal departments are bringing more work in-house instead of relying on outside counsel, according to a recently released report by ALM Legal Intelligence. The report, "Build or Buy? The Evolution of Law Department Sourcing," is based on a survey of in-house attorneys at companies with $5 billion or more in revenue per year. Its findings reveal that law departments are turning to the in-house legal team more than they are relying on outside counsel. In fact, respondents said that in-house counsel are the primary owners of work in eight out of 11 practice areas, including labor, intellectual property, and real estate. The results further show that law departments are not looking solely to reassign outside counsel work to the in-house legal team. They are also looking to other solutions to offer cost-efficiency for certain matters, such as technology or alternative service providers. Close to 60% of respondents said they rely on ASPs, with the highest legal spend going to consultants and legal process outsourcers.
CLOs May Put Underperforming Firms on the Chopping Block, Survey Says
Nearly 50% of global general counsel and chief legal officers say they may end a relationship with a law firm or outside counsel this year because of underperformance, according to a recently released survey conducted by the Association of Corporate Counsel. The "ACC Chief Legal Officers 2017 Survey," which examines feedback from nearly 1,100 CLOs and general counsel from 42 countries, shows that corporate counsel may terminate their outside counsel relationships if performance isn't where they want it to be. Forty-six percent of respondents say they either definitely (10%) or may (36%) end their relationship with outside counsel or firms that are underperforming. Approximately one-third of respondents say that last year they terminated at least one firm or outside counsel relationship because performance wasn't up to expectations, with legal departments with larger budgets reporting they were more likely to end such a relationship. Two-thirds, however, say they will definitely or possibly fill the void this year. "This indicates that CLOs are not necessarily ridding themselves of their outside law firm partners but rather changing firms, and this is likely to continue into 2017," the report states. "And these findings illustrate an opportunity for firms and departments to work toward greater value to maintain and improve corporate counsel-outside counsel relationships." The report also identified some of the top legal challenges faced by in-house counsel. As was the case with last year's report, ethics and compliance remains a top issue, with 74% rating this as "extremely" or "very important" in the next 12 months. Regulatory or governmental changes followed closely behind, with 71% identifying this as a top concern.
Law Firms Lose Clients by Putting People on Hold
U.S. law firms put callers on hold for approximately six seconds longer than the national average, according to a recently released study by audio-branding company PHMG. Law firms place callers on hold for about 36 seconds - longer than the 29.83 second average - and they are often forced to listen to silence, generic music, or beeps, which leads them to hang up and call competitors. The survey also found that only a very few law firms - approximately 9% - use an auto-attendant or answering service during off hours. The survey was conducted by calling 2,695 businesses in the U.S. and tracking how long it took to answer the call, how long callers were put on hold, and what they heard while on hold. "The research results do not reflect particularly well on the legal sector, as few firms appear to be employing a best practice approach to call handling," said PHMG CEO Mark Williamson. "It's worrying that customers are being left on hold for over 36 seconds as this can be a major irritation for customers, but what makes matters worse is that they are left in silence or listening to poor-quality music, which increases the risk of hang-ups."
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